Coca-Cola to target flavoured milk market

Coca-Cola is set to shake up the $450 million flavoured milk market, confirming it will launch its as yet undisclosed brand by year's end.

The soft drinks giant is on a global drive to diversify from its stronghold of carbonated beverages to water, juices and dairy. The Australian operation is concerned about moving too late on a category that many believe has room for growth, even though sales in Australia have plateaued.

"We need to be in the flavoured dairy market by summer 2004-05 at the very latest, otherwise we will probably be left too far behind," Coca-Cola South Pacific managing director Gary Williams said.

Competitors National Foods, Dairy Farmers and the Australian operation of the embattled Parmalat group are bracing for the marketing onslaught.

"We are not concerned," said Ian Greenshields, corporate affairs manager at National Foods, which has 47 per cent of the market. "If anything , it would be good for the market if someone like Coke came along. The market needs a big player to grow it and it needs innovation."

Last year the average Australian drank 9.5 litres of flavoured milk more than the per capita figure for any other country, but down on a high of 10.6 litres four years ago.

Coca-Cola can buy an existing brand, launch a new one, import one of its own, such as Swerve, the low-fat UHT milk canned drink launched in the US as a healthy alternative to carbonated drinks, or go into partnership with a milk manufacturer. "We are weighing up our options," Mr Williams said.

Pitted against Coca-Cola are brands that are leaders in their heartland states, namely Oak in NSW, Big M in Victoria, Breaka in Queensland and Farmer's Union Iced Coffee in South Australia.